Housing affordability has declined across developed nations and many emerging markets, primarily due to an imbalance between supply and demand.

In Spain, the issue is particularly acute, with tenants facing significant financial strain.

Recent data indicates that rental payments account for 34.7% of tenant incomes in Spain, exceeding both the recommended threshold and the eurozone average of 30.9%.

These figures stem from the European Central Bank's Consumer Expectations Survey conducted in January 2025, which provides an almost real-time picture of the situation amidst a lack of official statistics.

The survey serves as the initial institutional source indicating that the financial effort for housing surpasses the 30% benchmark, which is generally considered manageable for housing costs—including rent and basic utilities—relative to household income.

According to Spain's 2023 housing law, households spending more than this threshold are classified as experiencing "excessive financial effort." Based on the ECB's findings, renting in Spain is officially categorized as excessive financial effort, although regional disparities exist that the data does not break down.

Spain's rental cost burdens rank as the third highest among the countries analyzed, trailing only Ireland (36.9%) and Greece (35.2%), and tied with Finland.

The elevated ratio may stem from either higher rental prices compared to the euro area average or lower salaries for those renting.

The ECB specifies that the issue in Spain is largely due to comparatively lower incomes among renters, although the fact that prices exceed 30% of income in most eurozone countries also indicates housing costs not aligned with living standards.

The average rent in Spain is around €635, which is 5.8% lower than the euro area average of €674.

This suggests that the higher percentage of income devoted to housing is primarily due to lower earnings among renters in Spain.

While rental prices align closely with European averages, Spanish salaries remain significantly below the EU standard.

This disparity is more pronounced in Greece, where, despite having the lowest average rents in the eurozone at €405, renters still experience significant financial distress.

Meanwhile, in Ireland, the main concern is high rental prices, averaging €851.

The ECB notes that household characteristics impact rent ratios in each country.

In nations where a larger portion of the population rents, there tend to be more households with higher incomes in rental accommodation, which can reduce the average financial strain.

Germany exemplifies this trend with 46% of its population renting and a lower average effort ratio of 28.3%.

In contrast, Spain traditionally has a higher concentration of lower-income renters unable to purchase homes.

Data from the 2023 Living Conditions Survey indicates that the average net income of renting households is approximately 26% lower than that of homeowners.

Unlike Germany, Spain historically has been a nation of homeowners, though this dynamic is rapidly changing.

The primary driver behind rising rental costs is a significant shortfall in new housing availability, which stalled after the financial crisis, while demand has increased due to population aging, shifting family structures—characterized by more single-person households—and immigration flows.

The second wave of immigration following the pandemic has further intensified housing market pressures.

As a result, the ratio of new housing demand, measured by new household formations, to new housing supply, as indicated by building permits, has deteriorated more in Spain than in the EU overall, leading to a sharp increase in prices and declining accessibility.

According to Miguel Ángel González, an economist at FUNCAS, the peak tension point occurred in 2022, when demand for residential homes exceeded available new builds by a ratio of more than seven to one.

The limited stock of social housing, which was diminished following the financial crisis, growing short-term rental markets, and the entry of larger investors with substantial financial resources have also contributed to rising prices.

The upward trend in rental costs has accelerated, despite a revival in construction activities and a slowdown in the formation of new households.

As indicated in the ECB survey, average rental prices in Spain increased by 4% over the past year, with a sharper rise of around 5% projected in January 2025, outpacing the eurozone average.

This trend suggests rental prices are climbing faster than wages, which saw an increase of 3.8% in 2024 according to the National Statistics Institute and 3.4% based on collective agreement data.

The ECB data does not provide a breakdown by territory, but it highlights a generalized trend of increasing rental prices in urban areas and for smaller dwellings, driven by high demand for single-person apartments and urban population concentration.